The Reserve Bank of India (RBI) has decided to raise the minimum amount for non-callable term deposits from Rs 15 lakh to Rs 1 crore. As a result, depositors are now able to conveniently withdraw deposits of up to Rs 1 crore prior to maturity.
A fixed deposit is a deposit scheme that allows the account holder to withdraw the amount before the maturity date if needed. Deposits that permit early withdrawals are known as callable deposits. Although banks may impose a penalty for withdrawing funds early, callable fixed deposits do not have a mandatory holding period. Conversely, non-callable fixed deposits do not have a mandatory holding period either, but the invested amount can only be withdrawn under specific circumstances such as bankruptcy, business winding up, or in the unfortunate event of death.
Non-callable fixed deposits usually require a slightly higher minimum amount in comparison to callable deposits. Nevertheless, they provide a more attractive premium interest rate since the funds remain locked in for the entire duration of the maturity period.
One of the key benefits of non-callable fixed deposits is the ability to earn a higher interest rate. As the deposited amount is locked, depositors can enjoy the advantage of securing their funds at a more favourable rate, without concerns about possible rate reductions. Nonetheless, it is important to note that these deposits may not be readily available in emergency situations such as unexpected unemployment.
The recent RBI circular is applicable to both commercial and cooperative banks, as well as Non-Resident (External) Rupee (NRE) Deposit and Ordinary Non-Resident (NRO) Deposits. Consequently, all term deposits accepted by banks from individuals for Rs 1 crore and below now offer the convenience of premature withdrawal.
This action taken by the RBI offers investors a greater level of flexibility when it comes to utilizing fixed deposits for their debt investments. Furthermore, the limit for bulk deposits in regional rural banks has been raised to Rs 1 crore from Rs 15 lakh.
In conclusion, the revised RBI guidelines now allow investors to conveniently withdraw term deposits of up to Rs 1 crore before maturity, thereby providing them with enhanced flexibility in managing their investments. This alteration is anticipated to be advantageous for individuals who aim to optimize their debt investment strategies.
Ⓒ Copyright 2023. All Rights Reserved Powered by Vygr Media.
